BANK RECONCILIATION - Anglican Church Southern …€¦ · 11/07/2017 9:03:00 AM Parish Xero User Guide Page | 1 BANK RECONCILIATION This module covers the following topics: Automatic

11/07/2017 9:03:00 AM Parish Xero User Guide Page | 1

BANK RECONCILIATION

This module covers the following topics:

Automatic bank feeds

Reconciling bank statement lines

About Bank Rules

Set up a Bank Rule

Edit a Bank Rule

Delete a Bank Rule

Parish specific Bank Rules

Bank Reconciliation Summary

When something goes wrong

AUTOMATIC BANK FEEDS

In order to reconcile in Xero, bank statement lines need to be imported. There are two ways in which this can be done:

Automatic importing via bank feeds (recommended)

Manual import of a bank statement

Automatic bank feeds ensure that transactions on your bank accounts are loaded directly into your Xero file. A daily feed

containing transactions up to the previous day is available from ANFIN and most major banks on the next business day.

Bank feeds are not available for some account types. For detailed instructions on how to manually import a bank

statement file, go to https://help.xero.com/au/BankAccounts_Details_ImportTransCSV

To use bank feeds, the corresponding bank account must first be set up in Xero then a bank feed request lodged separately

for each required bank account.

For parishes converting from MYOB to Xero, the Diocese will usually have pre-established bank feeds (where available)

for all parish bank accounts.

For detailed instructions on how to set up a new bank feed, go to https://help.xero.com/AU/BankFeeds

RECONCILING BANK STATEMENT LINES

After bank feeds have been set up, or after a user imports bank statements manually, the statement lines will need to be

reconciled in Xero, This is the process of recording transactions in Xero to reflect how money has been spent or how

income has been earned.

Conveniently, if you choose to show all your bank accounts on the Dashboard, you will be alerted to the presence of any

unreconciled item(s) when you log into Xero.

https://help.xero.com/au/BankAccounts_Details_ImportTransCSV

https://help.xero.com/AU/BankFeeds


To view and reconcile the outstanding items:

1. Click on the blue Reconcile button on the Dashboard or go to Accounts > Bank Accounts then select the

Reconcile button attached to each bank account

2. First, compare the Xero Statement Balance with the actual bank statement to ensure that all bank statement

lines have been successfully imported. Whilst it is extremely rare, bank feeds can occasionally miss feeding a

line into Xero, or feed in a duplicate. Both of these would result in a discrepancy between the Statement

Balance shown in Xero and the actual bank account balance.

3. On the Reconcile tab, the number of transactions to be reconciled is shown in brackets. The left hand side of

the screen shows the bank statement line and the right hand side of the screen shows the proposed matching

transaction in Xero, if one exists. For each bank statement line, Xero follows a preset routine to help you to

reconcile.

4. Xero will first propose matches between the imported bank transactions and transactions already entered in

Xero. If Xero has selected the correct transaction, click OK to accept the proposed match and reconcile the

bank statement line with the selected transaction.


5. If Xero proposes a match that you do not approve, click the Find & Match button to search for and select the

correct transaction(s), then click OK to reconcile. For example, if a customer has paid you for two invoices,

Xero may propose that the bank deposit be matched to only one of the invoices. In this case, search for all the

unpaid invoices associated with the customer, then select the ones to be matched to single the bank statement

line.

6. Next, if there is no direct match, but there is match to a condition of a pre-set bank rule, Xero will suggest

creation of a new transaction. The suggested transaction will contain all the details predetermined by the bank

rule, including Account and GST setting. Click OK, to automatically create a matching transaction and reconcile

it with the bank statement line.

7. If there is no direct match or bank rule to apply, you can tick the Suggest previous entries checkbox to get Xero

to suggest a transaction based on a previously reconciled transaction with similar details. If required, click the

Add details button to enter or edit the transactions details. When the new transaction is ready to be matched

to the bank statement line, click OK to reconcile.

https://help.xero.com/au/BankAccounts_Details_BankRules


8. Alternatively, you can create a Spend money or Receive money transaction on the fly, while reconciling, by

clicking on the Create tab.

9. Enter or select the Contact name in the Who field.

10. Select the relevant Account from the drop down list, then enter a description in the Why field.

11. If required, select the relevant Tracking Category and GST setting.

12. If a more detail transaction is required, click the Add details button to open the full transaction entry screen to

create a multi-line transaction to match to the bank statement line.

13. When all details have been entered, click the Save Transaction button then click OK to reconcile the saved

transaction to the bank statement line.

14. If an unreconciled bank statement line relates to a transfer between two parish bank accounts, click the

Transfer tab.


15. If the bank statement line being reconciled is the payment side of the transfer, on the Transfer tab select the

bank account that will receive the transfer.

16. If the bank statement line being reconciled is the receipt side of the transfer, on the Transfer tab select the

bank account that will pay the transfer.

17. Click OK to reconcile the bank statement line with the transfer transaction.

18. Where the transfer is between two Xero bank accounts in the same file, only one side of the transfer needs to

be created. A transaction in the second bank account will be automatically created by Xero. Click OK to match it

to the bank statement line relating to the other side of the transfer. To ensure that you are matching the two

sides of the same transfer, check the dates and amounts are the same before clicking OK.

ABOUT BANK RULES

Bank rules are a time-saving way to reconcile regular cash transactions not associated with an invoice or bill.

When established, bank rules allow Xero to suggest new transactions based on pre-determined conditions. This saves

time entering transactions and ensures consistency in how similar transactions are recorded each time.

There are two types of bank rules in Xero

Spend Money rules for payments

Receive Money rules for receipts

The type of rule required is determined by the nature of the transaction and how Xero should recognise when to apply

the rule.

For example, a rule can be established so that a Spend Money transaction is created for the supplier Diocese and allocated

to the general ledger Account Diocesan Contribution (Expense) when the description on the bank statement line contains

the words “Parish Contribution”. To apply the rule and accept the transaction, the user can simply click OK to reconcile

the bank statement line. To ignore the rule and create a different transaction, the user can click on Don’t apply rule.


SET UP A BANK RULE

To create a bank rule:

1. Go to Accounts > Bank Accounts

2. Click on the Bank Rules button.

3. Or, while reconciling, click the Create rule button

4. The Bank Rule form opens.

Step 1: Select a condition that must be met in the bank statement line for this rule to apply. Click the Add a

condition button to add additional conditions and to specify if any or all conditions need to be met for this

bank rule to be used.

Step 2: Select the contact(s) (e.g. customer or supplier) that the rule will relate to.


Step 3: If required, click the Add a new line button to specify a fixed value line item to be associated with this

rule based transaction. This is not a mandatory field.

Step 4: Enter the default Description, Account, Tax Rate and Tracking Category that is to be applied to any

transaction created as a result of the rule being applied. Click the Add a new line button if the transaction is

always to be coded to more than one Account. Where more than one line is entered, you must also enter how

the transaction amount should be split using the Percentage field. The total percentage across all lines must

total to 100 per cent.

Step 5: Click on the drop down menu to select how the reference should be determined.

Step 6: Select the bank account where this rule should be applied. You can select all bank accounts or target a

specific bank account

Step 7: Enter a title for the new rule so you can easily recognise if Xero has applied the correct rule to any

bank statement line.

If the percentage split for a recurring transaction varies each time, a Bank Rule cannot fully

automate the creation of a matching Xero transaction. The use of Item Codes may be

preferable as a way of simplifying the data entry of recurring complex, multi-line

transactions.


EDIT A BANK RULE

To edit an existing bank rule:


2. Click the Bank Rules button.

3. Select the Spend Money Rules tab or Receive Money Rules tab, depending on the rule to be edited.

4. Click on the rule to open it for editing.

5. Alternatively, you can click on the name of the rule to open and edit during the bank reconciliation process.

6. Edit one or more of the seven rule settings, then click the Save button to update the rule.

DELETE A BANK RULE

To delete an existing bank rule:


2. Click the Bank Rules button.

3. Select the Spend Money Rules tab or Receive Money Rules tab, depending on the rule to be edited.

4. Select the bank rule(s) to be deleted by checking the box next to each rule.


5. Click the Delete button to delete the selected bank rules.


PARISH SPECIFIC BANK RULES

1. PARISH DIRECT

As a general rule, these donations are received as separate regular deposits into a dedicated Parish Direct bank account

and then automatically transferred as one daily total to Parish operating account. A bank rule is recommended for

consistent recognition of offerings deposited into the Parish Direct bank account.

To establish a bank rule to automate the Receive Money transaction for recognition of Parish Direct receipts as income:


2. Click the Bank Rules button, then

3. Click the Create rule button, then select Receive Money Rule from the drop down list.

4. The Receive Money Rule form will open. The settings here demonstrate that, during reconciliation of the

bank Account called Parish Direct, if any bank statement line contains the description ‘Parish Direct’, Xero will

propose a Receive Money transaction to allocate 100% of the deposit amount to the Account 42030 –

Offerings – Parish Direct. To use this rule in your parish, ensure that the relevant Account is selected at step

4 and the relevant target bank account is selected at step 6.

5. When a bank statement line meeting these conditions appears in the bank feed of the Parish Direct bank

account, the user can click OK to create the suggested transaction and reconcile the bank statement line with a

single click.


2. QUARTERLY LONG SERVICE LEAVE

Each quarter, the Diocese will direct debit the nominated Parish bank account for the required long service leave

contribution due for any qualified clergy. A bank rule is recommended to ensure consistent recognition of this quarterly

expense.

To establish a bank rule to automate the Spend Money transaction for recognition of long service leave contributions:


2. Click the Bank Rules button, then

3. Click the Create rule button, then select Spend Money Rule from the drop down list.

4. The Spend Money Rule form will open. The settings here demonstrate that, during reconciliation of the bank

Account called Operating Account, if any bank statement line contains the description ‘Clergy LSL QTR’, Xero will

propose a Spend Money transaction to allocate 100% of the payment amount to the Account 60150 – Rector’s

LSL. To use this rule in your parish, ensure that the relevant Account is selected at step 4 and the relevant

target bank account is selected at step 6.

5. When a bank statement line meeting these conditions appears in the bank feed of the Operating bank account,

the user can click OK to create the suggested transaction and reconcile the bank statement line with a single

click.


BANK RECONCILIATION SUMMARY

The Bank Reconciliation Summary is a report that shows how the actual bank balance and the balance of the bank account

in Xero match, after taking into account any unreconciled items.

This report is useful if your bank account statement balance and balance in Xero do not match, and you need to check for

duplicate or manually created transactions that might cause the discrepancy. The Bank Reconciliation Summary should

also be used to confirm that the bank account balance in Xero and the actual bank statement balance are equal before

commencing month end reporting.

To view the Reconciliation Report for any bank account,

1. From the Dashboard, click the dots icon to see all options.

2. Alternatively, go to Accounts > Bank Accounts then click on the Manage Account button.

3. Click on the Reconciliation Report option to launch the Bank Reconciliation Summary report.

4. Select the Bank Account to report on and required reporting Date from the drop down menus, then click the

Update button to refresh the report data.


5. For more information about interpreting the Bank Reconciliation Summary, go to

https://help.xero.com/AU/Report_BankRec

This is the bank

account balance

in Xero ‘Outstanding’ transactions

are in Xero but haven’t yet

appeared on the bank

statement

These are bank

statement lines

that are yet to be

matched to a Xero

transaction

https://help.xero.com/AU/Report_BankRec


WHEN SOMETHING GOES WRONG

YOU NEED TO EDIT A RECONCILED TRANSACTION

When reconciling, users will create and match transactions in Xero. Unfortunately, mistakes can be made along the way.

Common mistakes include:

Selecting the wrong Account

Entering a Contact incorrectly

Forgetting to select a Tracking Category

Selecting an incorrect Tax Rate

Most transactions can be edited to correct errors made during reconciliation. To locate a transaction for editing:

1. Go to Accounts > Bank Accounts > Manage Accounts > Account Transactions

2. If required, click the Search button to filter the list.

3. Select the transaction to be edited, then select an option from the drop down list.


4. Select Edit Transaction to change any of the details contained in the transaction including Account,

Description, Tax Rate or Tracking Category. You cannot edit transactions that were posted in a period that has

subsequently been locked for editing.

5. Select Remove & Redo to delete the transaction that was created as a result of reconciliation. As the

transaction will be deleted, the bank statement line will reappear on the reconciliation list to be reconciled

again.

6. Select the Unreconcile option if you have accidentally matched an Invoice or Bill transaction with the wrong

bank statement line. Unreconciling keeps both the account transaction and bank statement line, but it removes

the connection between the two. Beware, if you're unreconciling an account transaction that's been marked as

reconciled as this deletes the bank statement line as well.

STATEMENT BALANCE DOESN’T EQUAL ACTUAL BANK BALANCE

The statement balance is simply the bank account balance. This will mimic the real bank account balance and should be

compared periodically to ensure it matches. The statement balance is updated whenever bank statement lines are

imported into Xero.

There may come a time when there is a discrepancy between the statement balance in Xero, and the actual bank balance.

For this reason, it is important to understand what affects the statement balance and why.

Whilst it is rare, back feeds can miss feeding a bank statement line into Xero, or feed in a duplicate. Especially for ANFIN

accounts, sometimes transactions uploaded to Xero may appear in the statement a day later than the actual transaction

data due to the timing of the transaction and cut-off time of the statement generation.

To confirm if this is the case, you can run the Bank Reconciliation Summary report for several dates to identify the last

date on which the statement balance in Xero was equal to the actual bank statement balance. This should help to

identified missing, duplicate or deleted transactions.

INVOICE OR BILL SHOWS AS UNPAID BUT STATEMENT LINE IS RECONCILED

At the end of the month, you may have cleared the in tray and reconciled all outstanding bank statement lines, but the

Bank Reconciliation Summary shows an unpaid customer invoice or supplier bill transaction in Xero that you know has

been paid.

Payments made against invoices cannot be edited. You will need to remove a payment then

re-apply if changes need to be made to the transaction details


In this situation, it's likely that the receipt or payment has been mistakenly reconciled with a Receive Money or Spend

Money transaction created on the fly during the reconciliation process, instead of matching it with the invoice or bill

previously entered into Xero.

In this situation, use the Remove & Redo to un-match the bank statement line from the Receive Money or Spend Money

transaction, then use the Find & Match feature described in an earlier section to locate and reconcile the bank statement

line with the correct Invoice or Bill transaction.

For a step-by-step guide to resolving this issue, go to:

https://help.xero.com/au/BankAccounts-Reconciliation-Unpaid

https://help.xero.com/au/BankAccounts-Reconciliation-Unpaid

Documents

BANK RECONCILIATION - Anglican Church Southern …€¦ · 11/07/2017 9:03:00 AM Parish Xero User Guide Page | 1 BANK RECONCILIATION This module covers the following topics: Automatic